Education Property Tax Rates on Optional Property Classes
The Province has provided municipalities with 2004 business education tax rates for the broad commercial and industrial property classes. Where municipalities have adopted optional classes, the education tax rates for those classes are calculated based on the broad class rates set by the Province using the following method:
- Calculate the education tax revenue for the broad class by applying the regulated broad class rate to the entire assessment base for the class, including properties with RTQ's of T, U, X, P, Q, and R, (excluding PIL properties, farmland awaiting development and tenanted provincially-owned properties) after applying the standard reduction for vacant/excess land.
- Calculate the total tax ratio weighted assessment for the broad class by multiplying the total assessment for each optional class by the respective tax ratio after making adjustments for vacancies and then summing these weighted assessments.
- Calculate an "average TR-weighted" tax rate for the broad class by dividing the education tax revenue calculated in step 1 by the tax ratio weighted assessment calculated in step 2. This average rate is for calculation purposes only and does not replace the regulated rate for the broad class.
- Calculate the tax rates for each optional class by multiplying the "average TR-weighted" rate calculated in step 3 by the tax ratio for that class.
Example of the Calculation of 2004 Commercial and Industrial Education Tax Rates for Optional Classes
Example: All Optional Commercial Classes Adopted by the Municipality
The municipality has chosen to adopt the office, shopping and parking lot/commercial vacant land optional classes. The education tax rate regulated for its broad commercial class is 2.0%.
Total Education Property Tax Revenues for the Class
In order to calculate the total education tax revenues to be raised in commercial class, the regulated rate of 2.0% is applied to all assessment within the broad commercial class as if none of the optional classes had been adopted. The standard 70% adjustment is applied to all vacant/excess subclasses in the commercial class. The calculations are summarized in Table 1 below.
| Class | Assessment | Vacancy Adjustment | 2004
Class Education Tax Rate |
Tax
Revenues Under Class Rate |
|---|---|---|---|---|
| Residual Commercial | ||||
| Occupied | 2,000,000,000 | 100% | 0.020000000 | 40,000,000 |
| Excess | 45,000,000 | 70% | 0.014000000 | 630,000 |
| Vacant Land | 78,000,000 | 70% | 0.014000000 | 1,092,000 |
| Office | ||||
| Occupied | 44,000,000 | 100% | 0.020000000 | 880,000 |
| Excess | 1,000,000 | 70% | 0.014000000 | 14,000 |
| Shopping Centre | ||||
| Occupied | 670,000,000 | 100% | 0.020000000 | 13,400,000 |
| Excess | 2,000,000 | 70% | 0.014000000 | 28,000 |
| Parking Lot | 14,000,000 | 100% | 0.014000000 | 280,000 |
| Total Commercial Class | 2,854,000,000 | 56,324,000 |
Tax Ratio Weighted Average Rate
- Calculate the education tax revenue target for the broad class by applying the regulated rate of 2.0% for the commercial class to the assessment for the class after adjusting for vacancies, as illustrated in Table 1 above. This yields a total education tax revenue target of $56,324,000.
- Calculate tax ratio weighted assessment for the broad class:
Tax Ratio-Weighted Assessment Calculations: Multiply the assessment for each optional class by the tax ratio for that class after making adjustments for vacancies using the municipalityzs adopted vacancy adjustment factors.
- Total TR-Weighted Assessment for the Broad Commercial Class
= TR-weighted Residual Commercial Assessment +
TR-weighted Office Assessment +
TR-weighted Shopping Centre Assessment +
TR-weighted Parking Lot/Commercial Vacant Land Assessment
= (2,000,000,000 + 45,000,000 × 0.70) × 2.00 +
(44,000,000 + 1,000,000 × 0.70) × 3.00 +
(670,000,000 + 2,000,000 × 0.70) × 3.50 +
(14,000,000 + 78,000,000) × 2.50
= 4,063,000,000 + 134,100,000 + 2,349,900,000 + 230,000,000
= 677,777,000,000
- Total TR-Weighted Assessment for the Broad Commercial Class
- Calculate the "average TR-weighted" tax rate for the broad class
by dividing the education tax revenue target for the broad class
calculated in step 1 above by the tax ratio weighted assessment
for the class calculated in step 2.
- Average TR-weighted Education Tax Rate for the class
= 56,324,000 / 677,777,000,000
= 0.00831105
- Average TR-weighted Education Tax Rate for the class
This rate is for calculation purposes only and does not replace the regulated broad commercial class rate of 2.0%.
| Commercial Education Revenues Under Regulated Rate | 56,324,000 | ||
|---|---|---|---|
| TR Weighted Assessment for the Commercial Class | 6,777,000,000 | ||
| TR Weighted Broad Average Class Rate | 0.00831105 | ||
| Class | Tax Ratios | Tax Rates | Revenue Check |
| Residual Commercial - Occupied | 2.000 | 0.0166221 | 33,244,208 |
| Excess | 1.400 | 0.01163547 | 523,596 |
| Office - Occupied | 3.000 | 0.02493316 | 1,097,059 |
| Excess | 2.100 | 0.01745321 | 17,453 |
| Shopping Centre - Occupied | 3.500 | 0.02908868 | 19,489,417 |
| Excess | 2.450 | 0.02036208 | 40,724 |
| Parking Lot | 2.500 | 0.02077763 | 290,887 |
| Commercial - Vacant Land | 2.500 | 0.02077763 | 1,620,655 |
| Total Commercial Class | 56,324,000 |
Optional Class Tax Rates
Calculate the tax rate for each of the optional classes by multiplying the "average TR-weighted" tax rate above by the corresponding tax ratio for that class:
- Rate for Residual Commercial Class
= 0.00831105 × 2.00
= 0.01662210 - Rate for Office Class
= 0.00831105 × 3.00
= 0.02493316 - Rate for Shopping Class
= 0.00831105 × 3.50
= 0.02908868 - Rate for Parking Lot/Commercial Vacant Land Class
= 0.00831105 × 2.50
= 0.02077763
Further Information
For information about the calculation of the 2004 education tax rates, you may contact the Ministry of Revenue, Property Taxation Policy Branch.
Phone: John Pringle (416-327-0237)
E-Mail: john.pringle@fin.gov.on.ca
Web Site: English http://www.fin.gov.on.ca/english/bulletins/
Français http://www.fin.gov.on.ca/french/bulletins/
Note The information in this document is provided for general reference purposes only. For complete information or for precise interpretation, please refer to the appropriate sections of the Education Act and Ontario Regulation 400/98 as amended by Ontario Regulation 115/04.
